Ha Noi retail market retains lustre

Saturday, Jan 31, 2015 11:46

A supermarket in Ha Noi. The city's retail system is developed strongly in scale and quality to meet demand from the local people and foreign visitors. —   Photo VNA
HA NOI (Biz Hub) — The retail market in Ha Noi is still attractive for investors, even though it has experienced business impediments during the past, a Ha Noi Industry and Trade Department official said.

Last year was continuously marked by numerous fluctuations in the modern retail market nationwide, as well as in Ha Noi, which encountered many challenges in business, said Tran Phuong Lan, Director of the Department.

Some trading centres in the city had to sell or temporarily stop their operations, including the Thai Berli Jucler Group buying Metro Viet Nam, and the operations at Parkson Landmark 72 and Trang Tien Plaza being stopped for restructuring of retailers in the plaza, Lan stated.

The market share of the modern retail model stooped to a new low, she said, with the circulation of good in the modern distribution system accounting for 15 per cent of the market and other goods distribution systems being traditional markets and sale agents of producers.

These trading centres faced difficulties in business because there was a growing supply of retail spaces in the medium and high-end segments, while almost all retailers were small and medium-sized enterprises, Lan explained.

They have also found it difficult to seek retail spaces that were suitable for their financial ability. If they leased spaces in trading centres for a high rent, their goods would also have to be priced higher and would become difficult to sell.

Meanwhile, low purchasing power at present due to the economic crisis also affected the consumption of goods at these trading centres, said Lan, adding that customers could also buy goods via other channels, such as online trading, direct orders at home and through sales agents abroad and did not need to go shopping at trading centres.

However, in general, trading centres in Ha Noi follow a high development level, and have garnered attention from many foreign and home investors, such as the South Korean Lotte Group, the Japanese AEON Group, the Thai Central Group and Viet Nam's Vingroup, according to Lan.

According to CBRE's report, Ha Noi was ranked 13th in the list of 19 hot retail markets in the world and one of the top ten cities in the world that retailers planned to open their retail system in 2014.

This is because the retail system in Ha Noi has been developed strongly in scale and quality to meet demand from the local people and foreign visitors.

In 2015, approximately 397,000 sq. m of retail space from 19 projects enter the market. Of these, two projects have been completed, but their opening date is uncertain, and nine projects are currently being fitted out, according to Savills Vi?t Nam.

In 2016, five projects will come online with an area of 356,000 sq.m. Four projects are currently under construction.

"The retail market is on its way to improvement and seems to have found the right direction. The new trend is focused on developing supermarket models, food and beverage items and entertainment, with the main purpose being satisfying the clients' needs," said Do Thu Hang, the Head of Research and Consultancy, Savills Ha Noi.

According to CBRE Viet Nam stable economic factors in the future are expected to boost sales and boost buyers' confidence.

Rents are constantly dropping to maintain occupancy, but at a modest pace. The expansion of retail space and the arrival of new entrants is expected to drive the retail market in 2015 due to Viet Nam's commitments to the World Trade Organization. But, the Economic Needs Test (ENT) has remained a barrier for foreign retailers.

Projects have been restarted and the production of future supplies has sped up, following an economic recovery, according to the report. — VNS

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